Farrow-to-finish hog operation margins continue to show negative returns, the Livestock Marketing Information Center said. Based on Iowa State University calculations, the losses have continued for the last eight months.
“Estimated returns for a farrow-to-finish operation were a loss of $18.81 per head in June, based on Iowa State University calculations,” the LMIC said in an analysis. “June marks the eighth straight month with returns posting a loss for a farrow-to-finish operation.”
Feed costs have crept down over the last year.
“In June, total feed costs were $125.48 per head, a decline of 4.5% ($5.93 per head) from a year ago,” the marketing center said. “Most of the decline in feed costs came from lower costs for corn, which were $62.10 per head, a decrease of 10.7% ($7.47 per head) from a year earlier. Soybean meal feed costs were $21.73, up 2% from last year.”
Lower hog prices have been the main issue for the negative returns, the LMIC said. But slaughter hog prices have been rallying.
“The breakeven selling price for June was reported as $101.84 per cwt. which was $12.93 per cwt. above the reported selling price of $88.91 per cwt.,” the marketing center said. “Lower selling prices have been the main culprit for lower estimated returns over the last eight months. Slaughter hog prices (national weighted average base carcass) finally posted a weekly average above $100 per cwt last week at $101.01 per cwt. Early September was the last time the weekly average slaughter hog price was above $100 per cwt. Much of the gain in slaughter hog prices started to occur around early June when the price was around $80 per cwt. From that point, slaughter hog prices have gained an impressive $20.22 per cwt. (25%) in just eight weeks.”
Pork prices have supported the higher hog prices.
“Strength in the pork cutout value has led the charge towards higher hog prices,” the LMIC said. “… Strength in most primal values, especially the belly, have supported the cutout value, and this strength has made its way into hog prices which has improved estimated returns.”